Wool Forward Market Report 24 Feb 2023
A less dramatic week on the spot market. Prices continue to slip Tuesday losing around 1 to 2%. A higher passed in rate helped to stabilise the market into the close Thursday with buyers required to push higher to meet their shipping obligations.
The forward markets once again offered opportunities early in the week as buyers looked to get some cover on anticipation that the stronger USD might stimulate the market. The limited offering was snapped up at levels that exceeded the closing spot. 19.0 traded at 1735 and 21.0 at 1495 in the prompt window. In the spring 28.0 traded at full carry (interest plus storage) with 20t executed at 415 and 420 for September and October maturity.
With the spot market disappointing again bids pulled back and with them hedging opportunities. Buyers have reset their levels around 1 to 2% under spot for the prompt window. Whether we see improvement on these prior to the open of the auction series will rely solely on the short-term offshore demand signals. Supply remains high with over 50,000 bales again rostered for next week. The USD strength will help but not drive the market.
Trying to predict the future is always fraught with danger and the core reasons forward markets have a role. Up to date data is fundamental in helping to get a clearer picture of where prices might be heading and therefore the extent of the risk that needs to be managed. The Woolmark Wool Learning Centre has recently added a Price Risk Management Course to it’s library and can be accessed on this link.
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